The Bombay High Court (Commercial Division), through Justice R.I. Chagla, dismissed a petition under Section 34 of the Arbitration and Conciliation Act, 1996 seeking to set aside an arbitral award dated 5 February 2019 and a prior Section 16 order dated 3 September 2016.
The arbitral award had directed Shriram EPC Ltd. to compensate Parker-Hannifin India for custom-manufactured hydraulic components which were not accepted by the purchaser despite repeated assurances and readiness for delivery. The petitioner argued that 90% of the payment obligation lay with a third party (CIAL), under a Multi-Party Agreement (MPA), and that CIAL and APL (another third party) were necessary parties who should have been impleaded in the arbitration.
The Court rejected this contention, holding that the principal agreement remained the Supply Agreement between the petitioner and respondent, and that the MPA neither novated nor superseded it. Since the petitioner failed to procure the required Letter of Credit from CIAL, it remained liable under Clause 5.4.2 of the Supply Agreement. The Court emphasized that the MPA was unsigned by CIAL and APL and held that no formal attempt was made by the petitioner to implead them during arbitration.
Further, the Court found no infirmity in the arbitral tribunal’s interpretation of the contract or its award of damages, noting that the goods were custom-built and the petitioner had not directed cessation of production. It held that the arbitrator’s decision was not patently illegal or perverse and that Section 34 does not permit a reappreciation of evidence. The challenge to the arbitration clause based on insufficient stamp duty was also rejected, relying on the Section 11 order which had already affirmed the clause’s validity.
The petition was dismissed with the Court affirming the arbitral award in favour of Parker-Hannifin India.
Appearances:
Petitioner: Mr. Kevic Setalvad, Senior Counsel a/w Mrs. Rajalakshmy Mohandas; Mr. Amey Kulkarni, Ms. Mukta Chorge & Mr. Nehal Farukh Azam i/b Rajalakshmy Associates.
Respondent: Mr. Zubin Behramkamdin, Senior Counsel a/w Vijay Purohit, Faizan Mithaiwala, Pratik Jhaveri, Niyari Bhogayta, Vinit Kamdar i/b P&A Law Officers.
